Just hours into U.S. President Trump’s second term there were major doubts created about the viability of the multi-jurisdictional, multi-year effort to modernise international corporate taxation through the OECD’s BEPS project with the new U.S. Administration dropping its support for the ‘Global Tax Deal’ in an executive order. How this will affect the global implementation of BEPS and assessing whether aspects could be amended to regain the support of the U.S. Administration will be high on the OECD, EU and Irish tax agenda in the coming years.
In the second part of our review of the 2024 Irish Tax Monitor we highlight the key themes, recommendations and commentary made during the year pertaining to the Enterprise Economy, as the new Irish Government prepares to implement its Programme for Government. The overarching theme is that of simplification of the tax system with the final steps to introduce a territorial tax system high on the agenda from a corporate tax perspective, while international and EU rules in areas such as interest deductibility and transfer pricing have been piled on top of Irish rules, which, in some cases, were already considered overcomplicated and in need of revision. The taxation of investments, the improvement of business reliefs, especially to give a boost to Irish SMEs and the personal income tax system also feature.
One of the major developments in Ireland’s corporate tax system in 2024 was the introduction of a participation exemption regime for dividends (a major step towards Ireland developing a territorial tax system) which came into force at the beginning of 2025.
The desire to simplify the Irish tax system is one of the main drivers behind the introduction of a territorial tax system for corporates but during 2024 the Irish Tax Monitor highlighted areas where more needs to be done to cut complexity.
Measures to support Ireland’s SME sector also featured prominently throughout 2024 with some contributors seeing measures in support of the sector in Ireland lagging those of Ireland’s very successful FDI efforts.
Another update to the Irish tax code that has been advocated for throughout the Irish Tax Monitor in 2024 is making Ireland’s interest deductibility rules fit for purpose following the introduction of new layers of complexity (brought about by Interest Limitation Rules that are part of the EU’s Anti-Tax Avoidance Directive) on top of a set of rules that were already considered cumbersome.
While timing meant the recommendations of the Government’s Funds Sector 2030 review were not included in Budget 2025, there are a number of changes, especially in the area of taxation of Irish retail investors, that are expected to be made to further enhance Ireland’s investment funds offering.
There have been and number of calls and proposals for the development of a new dedicated Irish Special Purpose Entity (SPE) legal framework to support securitisation and structured finance transactions that could sit alongside Ireland’s tried and tested Section 110 company option.
There are many opportunities to enhance and improve the personal income tax system and make it more competitive.